Corporate Social Responsibility Assignment Help
Debate: What Benefits Organization, Society or the Stakeholders?
Introduction
The essay that follows aims to provide an insight into the concept of Corporate Social Responsibility (CSR) from the perspective of both, the society at large and the corporation itself. The debate, as to whether Corporate Social Responsibility benefits the society more or the corporation more has been raised by a number of authors and researchers. This paper seeks to discuss arguments both in favor of and against the idea that corporations are the bigger beneficiaries of CSR. The paper includes theories and various research works in order to support the arguments that have been presented. Logical deductions have been made and implications have also been included in the paper on the basis of these arguments and their discussion. The paper concludes while siding with the thesis statement; activities surrounding corporate social responsibility do tend to benefit organizations more than it benefits the society and other stakeholders.
What is Corporate Social Responsibility?
Over years authors and researchers have struggled to derive at a concurrent definition for corporate social responsibility. Dahlsrud (2006) provides an analysis for 37 different definitions that have been presented by various authors and researchers on the concept of CSR. Carroll & Shabana (2010) speculate 37 to be an underestimated count, they assume the number of varying academic definitions to be significantly higher. Corporate social responsibility is the act of operating an organization that would meet or surpass the ethical, legal, public, commercial and economic expectations and standards that the society sets for the business (Vishnubha, 2012). Despite the general agreement on this broader definition of corporate social responsibility, authors and researchers have put forth a wide array of theories and research work in order to understand the concept further (Brown & Forste, 2013).
A three domain model of corporate social responsibility was presented by Schwartz and Carroll (2003) as modification of Carroll’s (1991) previous work on a four domain model, whereby a corporation’s obligations towards the society were highlighted by three key components namely; the economic, legal and ethical responsibilities. Philanthropic approaches, as a fourth domain, suggested by Carroll (1991) were now merged with the ethical obligations in Schwartz and Carroll’s (2003) new framework. Windsor (2006) also evaluated corporate social responsibility from three moral dimensions including general welfare (ethical), private wealth (economic) and corporate citizenship.
The Debate
With slight modifications in definitions and the perspective as to how the idea is being looked at, the core concept remains the same and all authors and researchers agree that in essence corporate social responsibility is a way of operating within an environment such that it benefits the society and not harm it (Brown & Forste, 2013).
The question that is often raised in the International trade environment is whether the corporation actually realises its responsibilities towards the society or has a mission bigger than social welfare alone; under the assumptions that self-declared ethical considerations are sub consciously always reared up to end in the corporation’s favor. On one hand, researchers like Ahlstrom (2010) feel that corporate social responsibility adds value and greater benefits to the stakeholders and the society at large. On the other hand, researchers such as Vallaster, et al. (2012) have argued that corporate social responsibility is more of a strategic business tool where the major benefits lie within the organization.The paper that follows views these two perspectives in light of various arguments backed by theories, case studies and published research work and presents a conclusive viewpoint on the thesis statement: Corporate social responsibility provides greater benefits to the organization than it does to society and other stakeholders.
One of the initial takes on corporate social responsibility states profit maximization as the only responsibility that an organization has towards its stakeholders (Friedman, 1962). This was a rather narrow approach towards corporate social responsibility because it discarded society and the customers as key stakeholders. A critical argument proposed in the favor of the statement that organizations benefit more through the CSR activities holds its grounds in the same idea that organizations continue to seek better financial gains as well as sustainability in the name of social good. On the other hand, the concept put forth in the stakeholder theory states that every individual or group that has the ability to affect or get effected by any organization has the right to question the obligations that the company has towards the individual or group (Baker & Roberts, 2011). Vallaster, et al. (2012) have addressed corporate social responsibility as a possible branding strategy. This should imply that companies seek to look at corporate social responsibility not as a cost factor, but rather as an investment that they hope will benefit the organization in the long run.
In light of this argument, Baker & Roberts’ (2011) research and study on the packaging company PackCo stands very relevant whereby the corporation itself benefits greatly from its CSR initiatives. The concept is rightly named as “Strategic CSR” by Porter and Kramer (2002), whereby adopting a responsible approach can in turn support and strengthen the entire business startegy. Corporate philanthropy; the idea of aiming beyond the financial gains (for the betterment of the society) has multiple benefits. Not only does it create a competitive advantage in the market by representing itself as a responsible corporation but due to the stringent and responsible quality measures, it secures the very environment it has to operate in, therefore ensuring long term sustainability (Gelbmann, 2010).Schwartz & Saiia (2012) on the other hand try to find a middle ground between Friedman’s (1962) concept of CSR and the broader concept of CSR establishing that firms at times might need to think beyond themselves for the greater good. The cases of Ford and Merck analyzed in the discussions do call for socially responsible actions and do so at the cost of financial gain for the businesses. The broader concept of CSR does, then, benefit the society more than it benefits the corporations. This is in line with the utilitarian principle whereby the definition of right and wrong depends on what promotes the greatest good (Bentham, 1815). There are two conflicting ideas presented here. One, that sides with CSR benefitting the organizations mainly and another that supports the concept of the greatest good. Both sides of the coin are strong and have valid arguments. In light of this delimma, Klára’s (2011) research is extremely interesting as well as intuitive in forming my own opinion of this discussion. As a result of the author’s research, it was found that without exception, all the companies within the sample set had experienced significant declines in their CSR spendings after the fincial crisis. It does shed some light on these companies’ view of CSR. Generally speaking, ethical companies do not stop paying its suppliers or its employees or any inidviduals and groups that it deems itself responsible towards during the times of recession, at least as long as they can help it. However, according to Klára’s (2011) research it does reduce its spending in account of CSR, just like many companies reduce their spending on Advertisements during recession . Why? The only logical answer is, because companies essentially view CSR as an investment. Where the costs are no longer justifiable by the long term returns, the investment is probably not worth making!
On the other hand, Cosans (2009) suggests that maximizing profits and satisfying stakeholders are not necessarily mutually exclusive. Rather, many a time managers need to do one in order to do the other. For instance, one of the key stakeholders are shareholders and their biggest concern is ultimately to maximize profits. In this instance, what is in the best benefit of the organizatoion is also in the best benefit of its key stakeholders. Another key stakeholder internal to the organization is the company employees. Hansen, et al. (2011) have argued that while there has been a lot of research on the impacts as well as interests of external stakeholders as it concerns to corporate social responsibility, there is little to no research on its influences on the internal stakeholders; especially employees. Does this particular stakeholder benefit from activities of corporate social responsibility? A number of researchers have found a strong corelation between coroporate social responsibility initiatives and employee’s behvior towards the organization. Analysis from Hansen, et al.’s (2011) research results inidcates that employees show higher loyalty (Low turnover tendencies) towards companies that take CSR initiatives and demonstrate better organizational citizenship behavior. In a conflicting opinion, Rupp, et al. (2006) have argued that the way an employee reacts to his/her organization’s CSR initiatives primarily depends upon his/her perception of this CSR initiative. Employees might experience a sense of anger and frustration and therefore react negatively if they perceive the CSR initiative to be a source of corporate injustice. Employess can also experience dissonance but organizations need to manage these perceptions in order to reduce such dissonance (Rupp, et al., 2006)
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The research results can be further justified by Organizational Identification theory, a psychological process whereby an employee experiences a feeling of “self” in relation to his image of the organization he works for (Bhattacharya, et al., 2009). Both, low turnover and higher Organizational citizenship behavior are a by-product of increased job satisfaction (Arif & Chohan, 2012). While organizational citizenship behavior has been termed as an “unavoidable necessity for increasing organization’s effectiveness” (Karfestani, et al., 2013), low turn overs improve the performance levels throughout the organization (Tariq, et al., 2013). Conclusively, employees do benefit from CSR initiatives by experiencing a better portrayal of self image and an increased job satisfaction. This, in turn, leads to greater loyalty with the organization and improved levels of performance. One might deduce from the observations discussed here that eitherway, the major and greater benificiary of the initiative ends up being the company itself with a loyal workforce and an improved performance.
Devinney (2009) claims that corporate benefit is not only the result of a CSR initiative, it is also the objective. The author makes bold statements stating some of the organizational realities. Firstly Devinney (2009) states that corporations exist for economic reasons and not social reasons; they seek to maximize profit and not solve the social and environmental issues. Organizations are not the representatives of the society at large and they can mend societal standard using their political influence to their own accord. Moreover, most organizations are socially conservative and will not practice social initiatives unless they deem these to be profitable for the organization (Devinney, 2009). In light of these claims, another argument most frequently seen to be put forth in favor of CSR as benefiting corporations more than the stakeholders is the use of CSR as a marketing strategy (Vallaster, et al., 2012). Banerjee (2008) argues that if the society deems the corporation environmentally and socially safe then organizations can surely thrive with the nation but if the public observes the corporation as insensitive, not caring about the public, employees, environment or the society at large; the public might take an exact revenge and revoke its purchases and interactions with the corporations. It might therefore be safe to deduce that CSR is a defensive strategy, where the end objective is not the social welfare but organization’s own impression management. Further, Roberts (2003) argues in favor of using CSR as a tool of marketing establishing that the discussion of ethics and ethical liability within the business world is a positive inidcator for the betterment of the society. This should imply that managers, though in the mere interest of coroporates, but still, will be careful and sensitive of their business decisions and their impacts on the society at large.
